Which document tracks the inflow and outflow of cash in a business over a specific period?

The Cash Flow Statement is the document that specifically tracks the inflow and outflow of cash in a business over a defined period. It provides detailed insights into how cash is generated and spent across three main activities: operating, investing, and financing. This is crucial for understanding the liquidity position of the business, as it helps to evaluate whether the company can generate enough cash to meet its obligations, including day-to-day expenses, investments in assets, and liabilities.

In contrast, while the Income Statement reports on a company's revenues and expenses over a period to show profit or loss, it does not focus on cash flow. The Balance Sheet provides a snapshot of the company’s assets, liabilities, and equity at a given point in time, not over a period. The Profit and Loss Statement is essentially another name for the Income Statement, emphasizing profitability rather than cash movement.

By focusing on the cash itself, the Cash Flow Statement offers the most pertinent overview of a business's cash management, making it an essential tool for financial analysis.